Foreign investment rises by 5%

Japan’s Exedy Viet Nam produces automotive and motorbike parts. —VNA/VNS Photo Danh Lam

HA NOI (VNS) - Disbursements of foreign direct investment in the first two months of the year increased 5 per cent over the same period last year to US$1.05 billion, according to the Foreign Investment Agency (FIA).

However, the agency reported, registered capital in the period dropped nearly 62 per cent against the same period last year to $630.3 million. Of the total, 99 new projects accounted for $532 million, down 54 per cent year-on-year, while additional capital in 31 existing projects fell more than 80 per cent to $98 million.

The agency attributed the sharp drop in registered capital to the fact that a number of major projects were licensed last year, such as the $574 million Bridgestone project, the $180 million Oshima Shipbuilding endeavor and the $150 million Lock & Lock Living initiative. In contrast, this year the largest project licensed (to Terumo Corporation) totalled only $98 million.

Registered capital mainly went into the processing and manufacturing industries. These industries accounted for about 64.9 per cent of the country’s total registered capital, with a total registered capital of $408.9 million invested in 44 projects.

The health care sector was also attractive to foreign investors, drawing $80 million or 12.7 per cent of the country’s total registered capital.

Among 17 cities and provinces that attracted foreign investment in the first two months, the southern province of Dong Nai topped the list with registered capital of $214.35 million, followed by the southern province of Binh Duong with $134.9 million and the northern city of Hai Phong with $118 million.

Japan was the leading source of foreign investment in the first two months, responsible for registered capital of $258 million, followed by Taiwan with $81.4 million and Singapore with $56 million.

FDI firms gained a trade surplus of $2.96 billion. Their export turnover surged more than 27 per cent to $12.2 billion, while their import value also increased 13 per cent to $9.24 billion.

Viet Nam’s registered FDI capital last year reached $13 billion, of which $9.1 billion was registered in the processing and manufacturing industries.

The country also expected to attract $13-14 billion in FDI this year, but experts have warned that the race to attract FDI is becoming increasingly competitive. Japan has poured billions of dollars into Myanmar, an opening market attracting considerable global attention. Japan also has more than 7,000 businesses operating in Thailand, much higher than the 1,500 registered in Viet Nam.

Besides tax incentives, the country should also offer other financial and non-financial incentives to woo large foreign investors, such as low interest rates, credit insurance and low infrastructure and service fees, said Chairman of the Viet Nam Association of Foreign Invested Enterprises Nguyen Mai.

Out of 500 trans-national corporations worldwide, about 100 have a presence in Viet Nam. Small- and medium-sized foreign firms were interested mainly in tax incentives; in contrast, major foreign investors with long-term business strategies valued other incentives, Mai said. - VNS